Those Green Shoots Have Been Showing For Roughly 3 Months
by
DallasNE
07/03/2009, 9:33 PM #
Now. There is nearly $200 billion of the last stimulus that has not yet been used. A smaller, second stimulus, may well be necessary. Otherwise, we could plunge into a 2nd recession. Most recessions are fairly simple; demand cools and inventory builds up so companies lay off people while the inventory gets sold off. Because we import so much now the inventory issue happens off-shore so this recession was a completely different animal. The capital markets collapsed like they did during the Great Depression and for many of the same reasons. The stimulus won't do that much to repair the capital markets but it can prop up employment by being spent on infrastructure and stuff like that. Capital market recovery will take time because that is controlled at least as much by expectations as supply and demand issues. The sad part is that a lot of people saw the issue with the capital markets but action was slow in coming, especially from the SEC and the FED.
Have you noticed that the experts that just a few months ago were saying the recession would end in the spring of 2010 have now changed that timeline to the fall of 2009. They are seeing those green shoots too and the stimulus was the fertilizer. Like fertilizer, it will take more than one application. All things considered, Obama deserves high marks for his swift action with the stimulus. It may not be the perfect bill but the results have been quick in coming, witness the current projections on the economy.